The Existence of External Economies of Scale

question 34

Multiple Choice

The existence of external economies of scale

• A) tends to result in large profits for each firm.
• B) may be associated with a perfectly competitive industry.
• C) cannot be associated with a perfectly competitive industry.
• D) tends to result in one huge monopoly.
• E) focuses more on individual firms than the industry as a whole.

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Definitions:

Variable Manufacturing Overhead

Costs related to manufacturing that fluctuate with the level of production output.

Direct Labor-Hours

The entire sum of hours clocked by employees who are directly involved in product creation.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost.

Labor Standards

Benchmarks or criteria set for the amount of time and effort required to perform tasks efficiently and effectively.